Essential elements of negotiable instruments
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Essential elements of negotiable instruments
- 2. DEFINITION • Method of transferring a debt from one person to another • Means a • promissory note • Bill of Exchange • Cheque Payable either to order or bearer
- 3. CHARACTERISTICS • Contract to pay • Freely transferrable • Can be transferred till maturity • Possess the quality of negotiability • Transferor need not give any notice liable to pay the instrument • Transferee can use it in his own name • Good as cash • Expects the holder to make prompt payment • Capable of a proof as it has got special rules of evidence
- 4. PROMISSORY NOTE • It is an instrument in writing containing an unconditional undertaking, signed by the maker to pay a certain money only to certain person • People involved • Maker • Payee
- 5. ESSENTIAL ELEMENTS • Writing • Promise to pay • Definite and unconditional • Signed by the maker • Certain parties • Certain sum of money • Promise to pay money only • Bank note or currency note is not a promissory note
- 6. BILL OF EXCHANGE • It is an instrument in writing containing an unconditional order, signed by the maker to certain person to pay certain sum of money . • Parties to a bill of exchange • Drawer • Drawee • Payee
- 7. ESSENTIAL ELEMENTS • Writing • Contain an order to pay • Order must be unconditional • Requires three parties • Parties must be certain • Signed by drawer • Certain sum • Contain an order to pay money • Must have a stamp
- 8. CHEQUE • A cheque is a bill of exchange drawn upon a specified banker and payable on demand and it includes the image of a truncated cheque in the electronic form. • Always drawn on a specified banker • Always payable on demand
- 9. TYPES OF CHEQUE • Two types of cheques are there • Open cheque • Crossed cheque one in which two parallel lines
- 10. TYPES OF CROSSING General crossing Drawee bank shall not pay it unless it is presented by a banker Special crossing the banker on whom it is drawn shall pay it only to the banker on whom it is crossed or his agent for collection
- 11. DISHONOUR A bill may dishonoured By non acceptance or By non payment
- 12. THANK U….